San Francisco | Elon Musk’s artificial intelligence company, xAI, has secured $US500 million ($756 million) in commitments from investors toward a $US1 billion goal, according to people with knowledge of the talks.
The company is discussing a valuation of $US15 billion to $US20 billion, though terms could still change in the coming weeks, the people said, declining to be named because they were not authorised to speak publicly about the investment. Mr Musk said on X, the network formerly called Twitter, that the report was “fake news”.
Mr Musk said in November that equity investors in X will own 25 per cent of xAI. In practice, that means those investors are invited to invest in xAI at least 25 per cent the amount they invested in X, according to a person with knowledge of the arrangement. If they invested $US10 billion in X, they’re invited to invest $US2.5 billion or more in xAI, for example.
Mr Musk and investors were expected to finalise terms in the next couple weeks, the people said.
Some parties are evaluating whether they can get computing power in addition to, or in some cases instead of, xAI equity shares, one of the people said. That would be beneficial to venture firms’ portfolio companies, which need to process data intensively to build new artificial intelligence products.
Mr Musk launched the start-up last year as an alternative to Open AI, which he co-founded and later left over philosophical differences about how to profit from the technology. xAI’s product, a chatbot named Grok, is developed using social media posts on X, which Musk also owns. That allows Grok to access more recent data for its answers than other chatbots.
The two companies’ investors will probably overlap too.
Those who backed Mr Musk’s $US44 billion takeover of Twitter include Larry Ellison, Sequoia Capital, Andreessen Horowitz, Fidelity Management & Research and Saudi Prince Alwaleed bin Talal.
